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Tyrone J. Taylor
Tyrone J. Taylor, Enrolled Agent
Category: Tax
Satisfied Customers: 52
Experience:  Owner at Taylor Tax and Financial Consulting
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Are 529 funds taxable if used expenses?

Customer Question

Are 529 funds taxable if used for college expenses?
Submitted: 6 months ago.
Category: Tax
Expert:  Tyrone J. Taylor replied 6 months ago.

Hello Charles,

I am an Enrolled Agent with 9 years of professional tax experience.

The distribution of funds 529 plans, or Qualified Tuition Plans, is not taxable as long as the funds are used by the taxpayer, the spouse, or the dependent of the taxpayer. They must be used for college expenses, which includes tuition, fees, books, supplies, and equipment. In addition, room and board can be paid with 529 distributions as long as the student is enrolled at least have time in a degree or certificate program.

The distributions can not be greater than the actual qualified educational expense. If the distribution is higher than actual costs, the amount is taxable and is subject to an additional 10% tax.

I hope this answer meets your needs. If you need any clarification, please let me know. If not, please kindly go ahead and rate the answer I have provided. Have a great day.

Customer: replied 6 months ago.
Thanks.You confirmed what I thought I appreciate the counsel
Expert:  Tyrone J. Taylor replied 6 months ago.

You are welcome. If you don't mind, please go ahead and provide a rating for my answer so your question may be closed out. Thank you.

Expert:  Tyrone J. Taylor replied 6 months ago.

Good afternoon,

I am checking to see if you had any further questions. If not, please go ahead and rate my answer so your question can be closed out. Thank you.

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